Countdown supermarkets 1H earnings dip as digital investment continues

Wednesday 20th February 2019

Woolworths' New Zealand Countdown supermarkets posted a 2 percent decline in first-half earnings as the national chain continued investing to improve its digital capabilities.

Earnings before interest and tax fell to $148 million in the 27 weeks ended Dec. 30, from $151 million a year earlier. While sales were up 1.9 percent at $3.4 billion, the firm's cost of doing business ratio increased to 19.9 percent of revenue, from 19.5 percent a year earlier.

That implies operating costs rose to $676.8 million in the half, compared to $650.7 million a year earlier. Woolworths said the increase was "driven primarily by strategic investment into digital and data capabilities."

Countdown's online sales grew 40 percent in the second quarter, underpinned by more use of its pick-up service, where customers order online then collect their groceries from the store.

Woolworths wants to see a return from that digital investment, with group chief executive Brad Banducci saying his focus for the New Zealand arm is to realise the financial benefits of the investments in a new brand platform, its digital customer interface, and improved fresh food and health offerings.

There were 180 Countdown supermarkets across New Zealand with 402,787 square-metres of trading area at balance date, down from 181 six months earlier with 405,274 sqm.

Woolworths' group profit was A$979 million in the half, up from A$969 million a year earlier. Revenue increased 2.2 percent to A$30.7 billion. The board declared an interim dividend of 45 Australian cents per share, to be paid on April 5.

The ASX-listed shares fell 4.8 percent to A$28.80.

(BusinessDesk)

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